Business

Retail trade group reduces annual sales forecast

NEW YORK (AP) - The nation's largest retail trade group has pared its annual sales forecast because of slower-than-expected growth during the first half of the year tied to winter storms and lingering economic woes.

The Washington-based National Retail Federation said Wednesday that it now expects retail sales to rise 3.6 percent this year to $3.19 trillion, instead of its original prediction of a 4.1 percent increase, released in early February.

The figures include sales in stores and online but exclude automotive sales and sales at gas stations and restaurants. Online sales, which account for about 6 percent of total sales, are expected to rise about 10 percent this year, according to the National Retail Federation.

A series of winter storms hurt retailers particularly in the first quarter, keeping shoppers at home and forcing some stores to close temporarily. That business was hard to make up. The trade group calculated that sales increased a less-than-expected 2.9 percent in the first half, but retail sales are projected to increase at least 3.9 percent during the second half.

Stores are still dealing with the economy as they head into the back-to-school shopping season, the second-largest shopping period behind the winter holidays. Even as the job market is rebounding and the housing market is improving, many low- to middle-income Americans are not benefiting from these improvements.

"Consumers remain modest spenders," National Retail Federation Chief Economist Jack Kleinhenz said during a conference call with the media Wednesday.

In fact, National Retail Federation officials acknowledged that the promotions have started early for the back-to-school season, signaling a fiercely competitive environment.

Wal-Mart Stores Inc., the world's largest retailer, has cut prices on 10 percent more back-to-school items compared with last year. The Bentonville, Arkansas-based retailer also said that it's increasing the number of back-to-school products sold on its website by 30 percent to 75,000 this year from last year.

Meanwhile, Kmart and Sears, both owned by Sears Holdings Corp., are waiving service fees for layaway in stores and online during the back-to-school season for members of its loyalty program. The company is also broadening its deals to focus on the entire family, instead of just for children and teens.